Sumeet Srivastava, CO-Founder & CEO of Spocto, shares with TechStory, how Spocto is changing age old norms of the debt recovery sector using new age technology such as artificial intelligence and machine learning. In the interview, he also shares future roadmap of Spocto and its international ambitions.
1 – Scheduled commercial banks (SCBs) have written off loans worth Rs 10 trillion during the last five financial years. In this vast loan market, how does spocto aim to bring a change in debt collection and recovery?
At spocto, we stand for dignity in collections as we believe in a fair and respectful process for our customers, the borrowers in this case. We believe that every type of customer is our customer, whether they have taken a car loan or a credit card, our motto is to help them through their repayment process, and if someone fails, it does not make them a willful defaulter. We have a role to help the world improve, and we want to help India become a 5 trillion economy by assisting in collecting and ensuring fewer NPAs. We are also looking to help every individual grow with ease of access to capital and ensure everyone is treated well during the entire establishing journey by getting an option of a remediation plan in case something happens.
2 – How does Artificial Intelligence and Machine Learning help spocto enhance customer reach, engagement, and interaction?
Data science and artificial intelligence are key technologies that power today’s digital world. We use them to create an experience and augment human intelligence so that it can do more than ever before. We are conscious of the data privacy rules, GDPR regulatory systems and what the RBI is saying. Our dedicated team of data compliance officers constantly monitor regulatory compliance guidelines to ensure borrowers access capital while lenders are secure. Our platform automates the entire process, so financial institutions can focus on what they do best: lending money to borrowers. We have an entirety of solutions that we bring together through a compliance-first platform that enables borrowers to procure capital.
3 – As stated in the first question, the Indian finance sector faces a large issue of non-performing assets. How does a fully digitized debt collection process help solve this problem?
We need to ensure that borrowers know their debt and how they can pay it off. Most borrowers know of their debt and have already received messages and calls informing them of it. However, they may need to be made aware of the division of their debt: what the principal amount is and what charges are applicable. Most borrowers know they have made payments, but some may need to be reminded that they have already paid. This can be achieved by clarifying the debt amount and the payment history. Most borrowers know their CIBIL score, but many need help understanding what it implies and how it may impact their future borrowing capacity. An end-to-end full stack debt support system can help widen the knowledge of CIBIL with faster and more accurate results. Also, settlement options like installments for borrowers with limited financial capacities due to various circumstances can incentivize them to pay their debt in parts or as a whole, thus solving the large issue of non-performing assets.
4 – How does spocto connect with debtors and inform them regarding debt collection?
We at spocto use micro-segmentation and cohort analysis to group debtors based on similar characteristics and behaviors, which helps tailor the approach for individual debtors through effective communication. Here, spocto offers the right solutions to debtors based on their specific financial situation to help resolve their debt issues. We try to understand the probable reasons why the debtor cannot pay off their debt using our NLP collection bot, Bhaasa. Bhaasa is an Intelligent bot with human-like engagement powered by speech recognition with a collection of more than 200k words that allows the bot to understand the reasons. We then leverage different digital channels to address the issues as different demographics interact in other channels. We utilize those channels based on an AI allocation engine called Recommendation Guru. Post which we close the loop with our Settlement Bot by gamification of the settlement journey with Smart Settle, which offers multiple settlement options ensuring maximum returns.
5 – Being a new age tech startup in the financial sector, how many financial institutions have used products offered by spocto? What are their experiences with the fintech products?
We are pioneers in risk mitigation and debt support. We have grown to be the most prominent player by attracting around 30 clients, including the major banks in the country. Regarding credit card companies, we have BI Cards & Payment Services. In FY’22, we made 4 times the revenue than the previous year. During the same period, we saw a 6.5 times increase in profits which is quite an achievement for a fintech company.
6 – A fully digitized debt recovery process has its fair share of risk elements, such as cyberattacks, phishing, impersonation etc. How does spocto plan to counter these risk elements?
The right approach to cybersecurity is to balance risk and innovation. Cybersecurity services at spocto have been created and implemented across four model pillars, i.e., People, Processes, Policies and Technology. We are an ISO 27001:2013 certified organization and are already working on achieving SOC 2 for India and MENA locations in the coming months. We continuously create awareness on Regular Information Security and Data Privacy through multiple channels like in-person interactions, tools-based, spot awareness, gamification etc. Our central information security team works on all parameters of cybersecurity by adapting industry security standards like ISO 27001:2013 and SOC 2 in addition to the implementation of best practices of GDPR, NIST, PCI DSS, Cloud Security Alliance, and regulatory compliance requirements, i.e. RBI, SEBI, TRAI, and Information Technology Act. We are also putting in timely focus on vulnerability assessment and penetration testing using CERT-In empanelled security service providers. Adaptation of cloud platforms, zero trust model, implementation of best endpoint protection and global protection products, vendor risk assessment, business continuity and disaster recovery planning approach, risk management framework adaptation, access control management, database and server level encryption and a few other parameters that we emphasized to counter risk elements. I always emphasize that cyber security must be present in the very DNA of every organization, and that’s exactly what the information security team aims to achieve by improvising spocto’s security posture.
7 – How does spocto aim to increase its footprint in the Indian financial sector?
spocto’s solutions are unique not only to India but to the global audience as well. We intend to create, improve and implement solutions in India and distribute and execute them worldwide. We want to leverage our recently launched spocto Innovation Lab (SIL) as a key initiative to increase financial awareness among farmers. As for the rural sector, spocto is working with 10,000 farmers nationwide to understand their nuances better. This will help rural India’s repayment and give the banks the confidence to lend more, increasing formal credit penetration. In the case of MSMEs, it is one of the most under-penetrated segments in the country. The government has done well with initiatives such as collateral-free loans in the recent budget. spocto has been providing end-to-end risk mitigation & debt support throughout the journey of MSME underwriting and is looking to continue to expand the outreach.
8 – Does spocto have plans to go international? If yes, what are the prospects of the company on the international stage?
With a solid team and high customer demand, we have already forayed into the UAE, Middle East, and North Africa markets. And in a very short time, we have almost captured 40% of the banks, and have been able to build relationships, have conversations, and sign up with the top five banks in the UAE. We are already being sought after by customers from countries like Saudi Arabia, Egypt and many inbound queries are coming from large banks, even in the US. However, we will remain a company that will create solutions, develop, engineer, make, test, implement, and create value for India first before we impress and serve the world.